Amazon’s initiative to generate revenue from its Alexa-enabled devices has reportedly fallen short, costing the company billions. Between 2017 and 2021, Amazon incurred losses exceeding $25 billion from its Echo, Kindle, and other related devices, according to the Wall Street Journal, which referenced internal documents and anonymous sources familiar with the situation. Despite having hundreds of millions of customers, the Alexa-enabled Echo speakers are primarily utilized for basic functions like setting alarms rather than for making purchases on Amazon.
One former senior employee expressed concern about the company’s investment, stating, “We worried we’ve hired 10,000 people and we’ve built a smart timer.”
In response to the losses, Amazon CEO Andy Jassy is reportedly seeking solutions and is considering launching a paid version of its voice assistant. However, some engineers involved in developing this paid option have doubts about its potential success, as they believe it may not address the underlying issues.
An Amazon spokesperson commented, “We focus on the value we create when customers use our services, not just when they buy our devices. Our Devices & Services organization has established numerous profitable businesses for Amazon and is well-positioned to continue doing so.”
In addition, Amazon has unveiled a new AI-powered version of Alexa, which was demoed in September. However, former employees have indicated that the updated assistant is far from ready, citing a lack of sufficient data and access to necessary chips for running the large language model that powers it. The company has also reportedly shifted its priorities, putting more emphasis on generative AI for Amazon Web Services, its cloud computing division.
Amazon disputed claims from former employees, stating that they are misinformed about the current developments regarding Alexa AI. They asserted that the Amazon Artificial General Intelligence team has access to both in-house Trainium chips and Nvidia graphics processing units (GPUs), reaffirming their goal to create “the world’s best personal assistant.”